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Course Correction: EU Chief is Making Himself a Spokesman for Better Russia Ties

Juncker is finding his niche as the guy with 5% more brains that the rest of the pack

Originally appeared at Forbes


European Commission President Jean-Claude Juncker is becoming the spokesman for bring Russia back into Europe’s daily economic life. He said it in Germany in October. He said it again at the G-20 meeting in Turkey. And following the Paris terrorist attacks recently, his call to integrate Russia with Europe may no longer fall on deaf ears.

The momentum of favorable E.U.-Russia politics is a positive for Russia investment.

After the G20 summit last weekend, Juncker reportedly wrote a letter to Russian President Vladimir Putin where he expressed his support for greater economic cooperation.

“The decision on the circumstances in which to proceed along this path is in the hands of the member states of the European Union and should in particular by synchronized with the implementing of the Minsk agreements,” Juncker wrote, according to Reuters.

Dmitry Peskov, Putin’s spokesman said that Europe shouldn’t hinge its newfound interest in Russian business with the outcome of the Minsk II Accord. That agreement was made between Russia, Ukraine and Europe regarding a separatist movement in east Ukraine supported by the Russian government. The agreement stands in the way between Russia and Europe removing sanctions on each others economies. Europe has banned long term financing of Russian firms, and Russia has banned the import of some European foods.

Peskov said waiting for Minsk II to be golden “is unlikely to be relevant and hardly possible.” He blamed Ukraine’s government for fostering civil unrest in the Donbass region of east Ukraine.

Ukraine’s political crisis continues unabated. The OSCE said this weekend that fighting had started up again between the Ukrainian military and ethnic Russian separatists who want autonomy from Kyiv. Some areas like Donetesk in east Ukraine have already adopted the ruble for some business transactions, scaring Kyiv into believing that they will lose another bit of real estate to the Russians after losing Crimea in a secession vote in March 2014. Ukraine, the U.S. and E.U. argue that Russia annexed the Crimean peninsula and the secession vote was against Ukrainian law. The Minsk II agreement makes no reference to Crimea and therefore its return to Ukraine is not relevant to sanctions removal, at least not for the Europeans.

On Friday, Moody’s actually upgraded Ukrainian debt to Ca from Caa3 and changed its outlook from negative to stable. If Ukraine’s economy improves, that could change the way Ukrainians view their leaders in Kyiv. If the government to orchestrate a smooth transition out of its deep recession, it could provide it with some extra incentive to play nice with Russia.

While many in Europe and indeed Washington would advise against playing softball with the Russian government, Ukraine needs Russia more than Russia needs Ukraine. Ukraine is still many years away from being integrated into the European economy. For now, keeping the country in tact and growing out of its recession could go a long way from easing the political tensions in the east that matter to the Minsk accord, ultimately paying off for Russia-European ties.

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